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Short Sales

 

Q. What is a “short sale”? 

A. A “Short Sale” is the process through which a homeowner can sell a property even though the sale would not provide enough proceeds to pay off the existing mortgage balance. This is a situation also known as being “under water” on the mortgage where the mortgage balance is higher than the market value of the house. For a short sale, the mortgage holder (lender or lenders) may be willing to accept less than the full amount they are owed which often reduces the lenders’ costs associated with the foreclosure process. Lenders’ costs include attorneys’ fees, auction fees, eviction expenses, property maintenance after foreclosure, and re-selling expenses.

With a short sale, the homeowner may benefit from preventing foreclosure and bankruptcy, gaining more control over the selling process and timeframe, and possibly take less of a hit on their credit score to qualify for a future home purchase. Short sales have historically been a tedious and frustrating process, often taking many months to resolve, but there have been recent changes in the rules which streamline the process to a 30-60 day timeframe for a lender’s decision. An extension of the Mortgage Debt Relief Act through December 31, 2013 allows the homeowner tax benefits from the debt foregiveness. New rules may allow homeowners who are “under water” to qualify for a short sale even if they are not delinquent in their mortgage payments but affected by  illness, unemployment, or death of a spouse. Some lenders are paying the homeowner an additional relocation expense to encourage a short sale rather than the foreclosure process.

Short sales remain a complicated process, but should be considered as a viable alternative with guidance from an experienced Realtor, attorney and tax advisor.

 

Compliance with smoke detectors

 

Q. What are the requirements for smoke and carbon monoxide detectors when selling a house? 

A. State law requires that approved smoke and carbon monoxide detectors must be installed upon the sale or transfer of houses and that a Certificate of Compliance must be issued by your local fire department. As of 2010 a significant change became effective which requires a specific photoelectric smoke detector be installed within 20’ of kitchens and bathrooms (with a shower or bathtub). The risk of nuisance alarms from steam and cooking is lower with this type of detector. All smoke detectors installed outside of 20’ of kitchens and bathrooms must use a dual detector which has both ionization and photoelectric technology, or 2 separate detectors. This applies to all residences built before 1975, and is a recommended upgrade for house built after 1975.

Carbon monoxide alarms are required in all residences that have fossil fuel-burning equipment or an attached garage. Specific requirements for both smoke and carbon monoxide detectors vary depending on the year your house was built. 1 detector is always a must on each habitable level of living space, 1 for every 1200 sqft, 1 at the base of each stairway, 1 outside each sleeping area. Combination units are permitted. For specific requirements for your residence, contact your local fire department or Department of Fire Services at 978-567-3300 or www.mass.gov/dfs

Whether you own or rent, it is recommended that you test smoke and carbon monoxide detectors every month and replace the batteries twice a year. An easy reminder is to change the batteries when you change the clocks. Detectors that are over 10 years old should be replaced.

Local market update

 

Q. Has the real estate market improved this spring? 

A.  Many economic indicators support the current news reports that the real estate market is beginning a significant recovery. There are a number of factors which are creating a “perfect storm” for an active real estate market. The most influential factor is the historically low mortgage rates which allow home buyers to lock in rates for up to a 30-year period for under 4%. With a more stable economy, many buyers who have been on the real estate sidelines have more confidence in the job market to take advantage of these low mortgage rates and house prices that remain below the peak prices of several years ago.

There is upward pressure on house values because of the large number of prospective homebuyers combined with a significant lack of available properties for sale. As an example, the number of single family houses for sale inSharon(based on MLS data) is approximately 36 with another 29 houses already under contract and scheduled to close. Out of this total, there are only 5 available in the price range from $100,000-$500,000 and another 26 currently available in the price range $500,000-$1,000,000. Typically, there would be 3-4 times this number of available houses for sale. 

Here is a year-to-year comparison of single-family houses sold inSharon: (mls data)

  Year         # of sold houses        Average Sales Price           Selling Price/List price %

 2010                 148                           $434,700                                  96%

2011                 164                             450,500                                  97%

2012                 209                             449,000                                  97%

1/13-3/13           37                             500,800                                  96%

 

This chart reveals both an increase in numbers of house sold and an increase in average selling prices.